Live blog of Bernanke press conference

High unemployment is a huge waste, Fed Chairman Bernanke says, kicking off his press conference.

Bernanke is explaining why the Fed believes getting unemployment down is the most pressing issue facing the economy, and why the Fed took additional actions today to bring interest rates down and promote economic growth.

In a big change, the Fed is signaling that it will continue its accommodative policy until things improve. In the past, the Fed has used a certain date at which point it believes the policy can begin to be tightened.

The Fed doesn’t think full employment is 6.5%, Bernanke says. The long-run full employment rate is between 5% and 6%, according to the Fed’s economic forecasts released today. It’s just that the Fed would have to start raising interest rates before it reaches its long-run target.

The Fed won’t automatically start hiking rates when the jobless rate hits 6.5%. The decline in unemployment would have to be sustainable and based on strong labor force growth.

Bernanke says the new conditional guidance will work better at communcating to the public. For instance, if the economy improves faster than expected and the unemployment rate drops, markets can instantly update their expectations about Fed policy without having to wait for confirmation from the Fed.

Bernanke says the impending fiscal cliff is already affecting business decisions by creating uncertainty. He says the economic forecasts by Fed officials most likely assume that the fiscal cliff is resolved, but that some fiscal drag occurs next year.

The Fed isn’t providing any more stimulus by replacing Operation Twist bond purchases with outright purchases, It’s not the size of the Fed’s balance sheet that matters, but how much the Fed is forcing private investors to adjust their own holdings, Bernanke said.

Bernanke iis asked if the economy would really feel the impact of a fiscal impasse. Would people really lose their jobs?

Where has this guy been the last few months? Bernanke has been pounding the table on this, and he even coined the term “fiscal cliff” to describe what he thinks the impact would be on workers and businesses.

Why isn’t the Fed doing more to get unemployment down, Bernanke is asked.

Bernanke tries to defend the committee’s actions, but seems frustrated by the lack of progress on unemployment.

Before he joined the Fed, Professor Bernanke advocated very aggressive moves for Japan that the Bernanke Fed hasn’t adopted. He’s not the dictator of the Fed, and that’s OK. A collective judgment may yield a better outcome than an edict from the chairman.

The Fed isn’t all-powerful, and the central bank must be careful of unintended consequences of its actions, he says.